The changes introduced in the CCC concern a new type of a commercial power of attorney (prokura), minority shareholders of a limited liability companies and their rights in terms of convening shareholders’ meetings, revising meeting agenda by shareholders, mandatory elements of share certificates and dividend payout in public companies.
On 1 January 2017, an act amending certain other acts entered into force in order to improve the legal environment with which business owners have to cope (Journal of Laws of 2016, item 2255). The amending act is an element of a whole package of improvements planned by the lawmakers which are to facilitate running a business in Poland. The scope of the amendment also includes the Commercial Companies Code.
Commercial power of attorney
The changes introduced to the Commercial Companies Code include among others regulations adjusting the previously applicable provisions to the new type of commercial power of attorney provided for in the Civil Code, so-called irregular commercial power of attorney to joint representation (prokura łączna niewłaściwa) which empowers the holder of such a power of attorney to act also or only jointly with a member of a governing body or a partner entitled to represent a partnership.
The rights of minority shareholders
The amended CCC also facilitates for minority shareholders of limited liability company to exercise the rights to convene shareholders’ meetings and add items to agenda.
Article 236 § 1 of the CCC in the new wording states that shareholders requesting that a shareholders’ meeting be convened can at the same time request that specified issues be placed on the agenda of such meeting.
The change rules out the previously possible interpretation of the provision whereby a management board could comply with the shareholder’s request and convene a meeting without accepting the agenda proposed by the shareholders.
What is more § 11 has been added to Article 236 of the CCC whereby a threshold of the stake in a company share capital entitling one to request that certain items be placed on the agenda of a shareholders’ meeting (before 1 January 2017 the stake of shareholders requesting the revision of an agenda was 1/10 of the share capital, the amendment lowers this threshold to 1/20). The provisions of § 11 allow for the articles of association of a company to provide for shareholders representing less than 1/20 of a share capital to have a right to revise agenda of a shareholders’ meeting. It is, therefore, inadmissible to establish a threshold from which an agenda may be revised which would exceed 1/20.
As a result of the amendment in question there is a risk that the provisions in articles of association which are based on the previous provisions of the CCC concerning the 1/10 sake in a share capital entitling to revise an agenda will be found invalid.
The change may also affect practice regarding transactions (joint venture agreements, M&A transactions) where the lower threshold of the stake in a share capital vesting significant rights with shareholders will need to be taken into consideration.
Moreover, the changes introduce a 3-week deadline for filing a written request by shareholders and oblige the management board to introduce changes in the agenda and notify the changes in line with the procedure prescribed for convening shareholders’ meetings.
Another right introduced by the above said act with a view to improving the protection of minority shareholders of limited liability companies is the right of the shareholders who requested the convention of a meeting (under the authority of a court) to apply to a register court for exemption form the obligation to cover the costs imposed under a resolution of a shareholders’ meeting (new wording of Article 237 § 2 of the CCC). Before the act in question became binding the costs of convening and holding a meeting convened by authorized shareholders under the authority of a court were incurred by the convening shareholders without any possibility of exemption from such costs, unless a resolution was passed on the covering of such costs by the company. Under the current provisions of law, if a resolution was passed on the covering of the costs by the shareholders, the shareholders bound to cover the costs of a meeting (the shareholders convening the meeting) may apply to a registration court to be exempt from covering such costs. It is not clear if in the current legal conditions the right to apply for exemption from costs of convening and holding a shareholders‘ meeting is to be enjoyed by shareholders also when a resolution on the covering of the costs was not passed (on the literal level, the amended provision of law only points to exemption from the obligation to cover the costs imposed under a resolution of a shareholders’ meeting, however, the second sentence of Article 237 § 2 of the Commercial Companies Code leads one to assume that shareholders incur such costs regardless of whether or not any resolution was passed).
Changes also concern the requirements regarding obligatory elements of share certificates.
The obligation to affix the company seal on share certificates was given up.
Prior to the amendments, the lack of a company seal resulted in invalidity of a share certificate (new wording of Article 328 § 2 of the CCC). The change is supposed to reduce the formality of the process of share certificate issue and mitigate the requirements for share certificate validity. The lawmakers rightly assumed that affixing a seal to a document does not raise its reliability nowadays in the face of the general availability of any kinds of seals.
Dividends in public companies
Modifications were also introduced in the regulations regarding dividend payouts in public companies.
In accordance with amended Article 348 § 4 of the CCC, the day of dividend payout may fall on a day no earlier than five days and no later than three months of the passing of a resolution. Before 1 January 2017, the date of dividend payout in public companies was regulated only in good practices of companies listed on the WSE or NewConnect.
Thereby lawmakers gave up the non-binding regulation which was based on the principle “comply or explain” in favour of regulations of statutory rank.
The day of conversion of a natural person
The amendments to the CCC also adjust the provision concerning the day of conversion of a natural person into a single-shareholder capital company to the amendment of the act on freedom of economic activity.
The disclosure of a conflict of interest of a management board member and a company
The amending act introduces also, apart from the already binding obligation to refrain from dealing with matters involving a conflict of interest between a company and a management board member, his or her spouse, relatives up to second degree of affinity or consanguinity, and persons with whom he or she is personally related, the obligation of a management board member to disclose such conflict of interest. In remains unclear, however, on what grounds, how and to what extent a management board member should do so. The amendment also fails to specify to whom such information should be disclosed. It seems, however, that the remaining management board members are authorised to accept such statement of a conflict of interest which was also indicated in the justification of the bill.